Margaret Thatcher

Margaret Thatcher died today. She was Britain's first female prime minister and the longest-serving prime minister of the twentieth century. She became PM in 1979 and was forced out of office in 1990. I was sitting in a first-year economics lecture in November 1990, when someone burst into the lecture theatre to tell the class that she had resigned. Most people of my generation can remember where they were when we heard the news that the Iron Lady had resigned. You can read more about Margaret Thatcher here and an obit is here. Below is video clip from her last appearance in the House of Commons as PM, which gives one a flavour of this unique lady.

I admired Thatcher for four reasons. First, she was a conviction politician who stuck to her principles and would not be 'turned' by popular opinion. All British PMs since Thatcher have lacked this quality. Second, her radical economic reforms, although hated by many, helped to transform the UK economy. You can read about the influence of Hayek and Friedman on Thatcher here. Third, she was a defender of democracy and its institutions. Fourth, she was rightly suspicious of the European project.

Thatcher did misjudge several things. First, I think her handling of Northern Irish politics could have been more astute. However, the murder of her friend Airey Neave and the Brighton bomb undoubtedly shaped her policies on the Irish question. Second, as she was hostile to local democracy (mainly because it was dominated by socialists), she strengthened central government at the expense of local government.

The Economics of Global Warming

The Berkeley Earth Project , an independent study of global warming, has found that the earth has become a degree warmer over the past half century. However, the statistical uncertainty surrounding pre-1920 estimates makes it very hard to say much about long-term trends - click here for graph . This is one of my concerns with the global warming debate - we simply don't have trustworthy long-run data which looks at temperature changes over the last millennium (or two). My second concern with the global warming debate is that it is very hard to prove any sort of casual link between global warming and human activity. The scientists may be able to show correlation between global warming and our production of carbon dioxides etc., but correlation is not causation. My third concern with the debate is that those who are sceptical or agnostic are stereotyped as flat-earthers or intellectually-challenged crackpots. This only stifles debate and the progress of science itself.

Boom and Bust: A Global History of Financial Bubbles

Boom and Bust: A Global History of Financial Bubbles, co-authored with my colleague Will Quinn , is forthcoming in August. It is published by Cambridge University Press and is available for pre-order at Amazon , Barnes and Noble , Waterstones and Cambridge University Press .

The Failure of Herstatt Bank

As an undergraduate, I was taught about the failure of Herstatt Bank in 1974 and Herstatt risk. This bank was only the 35th largest bank in Germany at the time so why would anyone be interested in studying its failure? Herstatt failed because of its involvement in risky foreign exchange business. When it closed its doors on 26 June 1974, counterparty banks (mainly in New York) had not received dollars due to them because of time-zone differences - this is known as settlement risk. The cross-jurisdictional implications of its failure resulted in the Bank for International Settlements setting up the Basel Committee on Banking Supervision and Herstatt's failure was a key reason for the establishment of real-time gross settlements systems, which ensures that payments between two banks are executed in real time. The Bank of England's Ben Norman has an interesting post on Herstatt over at the Bank's new blog ( Bank Underground ). As well as giving an excellent overview of

Finance: Past, Present and Future

Search This Blog